Sysco SYY Form 10-Q filing Q3 FY2026

PART I – FINANCIAL INFORMATION Page No.

Item 1. Financial Statements 1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32

Item 3. Quantitative and Qualitative Disclosures about Market Risk 57

Item 4. Controls and Procedures 58

PART II – OTHER INFORMATION

Item 1. Legal Proceedings 59

Item 1A. Risk Factors 59

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 60

Item 3. Defaults Upon Senior Securities 61

Item 4. Mine Safety Disclosures 61

Item 5. Other Information 61

Item 6. Exhibits 61

Signatures 64

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

Note: The June 28, 2025 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements

2

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)

(In millions, except for share and per share data)

See Notes to Consolidated Financial Statements

3

Sysco Corporation and its Consolidated Subsidiaries

See Notes to Consolidated Financial Statements

4

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)

(In millions, except for share data)

Quarter to Date

See Notes to Consolidated Financial Statements

Year to Date

See Notes to Consolidated Financial Statements

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Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In millions)

(1) Cash paid for income taxes, net for the 39 weeks ended March 28, 2026 and March 29, 2025 includes $227 million and $190 million, respectively, of cash paid for the purchase of federal tax credits.

See Notes to Consolidated Financial Statements

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Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Sysco,” or

the “company” as used in this Form 10-Q refer to Sysco Corporation together with its consolidated subsidiaries and divisions.

1. BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without an audit. The financial statements

include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income,

changes in consolidated shareholders’ equity and consolidated cash flows. In the opinion of management, all adjustments,

which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position,

results of operations, comprehensive income, cash flows and changes in shareholders’ equity for all periods presented have

been made.

These financial statements should be read in conjunction with the audited financial statements and notes thereto

included in our Annual Report on Form 10-K for the fiscal year ended June 28, 2025 (our “fiscal 2025 Form 10-K”). Certain

footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting

principles (GAAP) have been condensed or omitted pursuant to applicable rules and regulations for interim financial

statements.

Supplemental Balance Sheet Information

Supplier Financing Programs

We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers’

ability to finance payment obligations from the company with designated third-party financial institutions. Participating

suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their

scheduled due dates at a discounted price to participating financial institutions. Obligations of the company that have been

confirmed as valid require payment by Sysco upon the due date of the obligation.

Our outstanding payment obligations that suppliers financed to participating financial institutions, which are included

in accounts payable on the consolidated balance sheets, are as follows:

Accounts Receivable, Less Allowances

We utilize arrangements to sell portions of our trade accounts receivable to third-party financial institutions on a non-

recourse basis in exchange for cash. The arrangements meet the requirements for the receivables transferred to be accounted for

as sales and are accounted for as a reduction in trade receivables. Proceeds from the sales are reported net of negotiated

discount and are recorded as a reduction to accounts receivable outstanding in the company’s consolidated balance sheets and

as cash flows from operating activities in the company’s consolidated statements of cash flows. Accounts receivable sold under

these arrangements were $1.4 billion and $1.9 billion for the third quarter of fiscal 2026 and 2025, respectively, and $4.4 billion

and $6.0 billion for the first 39 weeks of fiscal 2026 and 2025, respectively.

In certain instances, Sysco has continuing involvement subsequent to the transfer, limited to providing certain

servicing and collection actions on behalf of the purchasers of the designated trade receivables. The outstanding aggregate

principal amount of receivables that has been derecognized and remain outstanding was $198 million and $189 million at

March 28, 2026 and June 28, 2025, respectively. We continue to service the receivables post-transfer on a non-recourse basis

with no participating interest.

Supplemental Cash Flow Information

The following table sets forth our reconciliation of cash, cash equivalents and restricted cash reported within the

consolidated balance sheets that sum to the total of the amounts shown in the consolidated statement of cash flows:

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(1) Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within other assets in each consolidated balance sheet.

The following table sets forth our non-cash investing and financing activities:

2. NEW ACCOUNTING STANDARDS

Recent Accounting Guidance Adopted

Segment Reporting

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment

disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public

entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief

operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its

composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 is

effective for fiscal years beginning after December 15, 2023, (our fiscal 2025), and interim periods for our fiscal years

beginning after December 15, 2024, (our first quarter of fiscal 2026), and should be applied on a retrospective basis to all

periods presented. Sysco adopted ASU 2023-07 related to annual disclosure requirements effective with our fiscal 2025 Form

10-K. The newly required annual disclosures were included in Note 21 - Business Segment Information of the fiscal 2025 Form

10-K. We adopted ASU 2023-07 related to interim disclosure requirements effective with our first quarter fiscal 2026 10-Q

filing. See Note 14 included in this Form 10-Q for the additional segment disclosures required as a result of the adoption.

Adoption of ASU 2023-07 only impacted our financial statement disclosures, with no impacts to our financial position or

results of operations.

Recent Accounting Guidance Not Yet Adopted

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax

Disclosures to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid

information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, (our fiscal 2026), and may be

applied prospectively or retrospectively. Early adoption is permitted. We are currently evaluating the effect of adopting ASU

2023-09 on our disclosures.

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Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense

Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard update requires

more detailed disclosures related to the types of expenses included within commonly presented income statement captions. The

amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, (our fiscal 2028),

and interim reporting periods for our fiscal years beginning after December 15, 2027, (our first quarter of fiscal 2029). Early

adoption is permitted. The standard updates are to be applied prospectively with the option for retrospective application. We are

currently evaluating the effect of adopting ASU 2024-03 on our disclosures.

Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software

(Subtopic 350-40), which amends certain aspects of the accounting and disclosure of software costs under ASU 350-40. This

ASU updates the cost capitalization threshold for internal-use software development costs by removing all references to

software project development stages and providing new guidance on how to evaluate whether the probable-to-complete

recognition threshold has been met. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027,

(our fiscal 2029), and interim reporting periods within those annual reporting periods, (our first quarter of fiscal 2029). Early

adoption is permitted. The standard updates may be applied prospectively, retrospectively, or via a modified prospective

transition method. We are currently evaluating the effect of adopting ASU 2025-06 on our consolidated financial statements

and disclosures.

3. REVENUE

We recognize revenues when our performance obligations are satisfied in an amount that reflects the consideration

Sysco expects to be entitled to receive in exchange for those goods and services. Customer receivables, which are included in

accounts receivable, less allowances in the consolidated balance sheet, were $5.4 billion and $5.1 billion as of March 28, 2026

and June 28, 2025, respectively.

The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal

product categories for the periods presented:

(1) Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

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(1) Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

(1) Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

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(1) Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

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4. ACQUISITIONS

During the first 39 weeks of fiscal 2026, the company paid $189 million primarily for the acquisitions of Fairfax

Meadow and Ginsberg’s Foods.

In certain circumstances, purchase price allocations may be based upon preliminary estimates and assumptions.

Accordingly, allocations are subject to revision until Sysco receives final information and completes its analysis during the

measurement period. This includes finalizing the valuation of acquired tangible and intangible assets and related tax attributes.

Sysco’s operations within the United Kingdom will undergo a rebranding initiative, rebranding the Brakes® brand and

other smaller brands, as “Sysco GB.” This rebranding initiative will take approximately two years and will result in Sysco

amortizing previously indefinite-lived intangible assets on a straight-line basis over this two-year period. Amortization expense

related to these intangible assets is expected to be $29 million in fiscal 2026, $49 million in fiscal 2027 and $25 million in fiscal

2029. FAIR VALUE MEASUREMENTS

Sysco’s policy is to invest only in high-quality investments. The fair values of our cash deposits and money market

funds included in cash equivalents are valued using inputs that are considered a Level 1 measurement. Other cash equivalents,

such as time deposits and highly liquid instruments with original maturities of three months or less, are valued using inputs that

are considered a Level 2 measurement. The fair value of our marketable securities is measured using inputs that are considered

a Level 2 measurement, as they rely on quoted prices in markets that are not actively traded or observable inputs over the full

term of the asset. The location and the fair value of the company’s marketable securities in the consolidated balance sheet are

disclosed in Note 6, “Marketable Securities.” The fair value of our derivative instruments is measured using inputs that are

considered a Level 2 measurement, as they are not actively traded and are valued using pricing models that use observable

market quotations. The location and the fair values of derivative assets and liabilities designated as hedges in the consolidated

balance sheet are disclosed in Note 7, “Derivative Financial Instruments.”

The following tables present our assets measured at fair value on a recurring basis as of March 28, 2026 and June 28,

2025:

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their

short-term maturities. The fair value of our total debt is estimated based on the quoted market prices for the same or similar

issues or on the current rates offered to the company for new debt with the same maturities as existing debt and is considered a

Level 2 measurement. The fair value of total debt was approximately $13.4 billion as of March 28, 2026 and $12.8 billion as of

June 28, 2025, while the carrying value was $14.0 billion as of March 28, 2026 and $13.3 billion as of June 28, 2025.

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6. MARKETABLE SECURITIES

Sysco invests a portion of the assets held by its wholly owned captive insurance subsidiary in a restricted investment

portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. We include

fixed income securities maturing in less than 12 months within prepaid expenses and other current assets. Fixed income

securities maturing in more than 12 months are included within other assets in the accompanying consolidated balance sheets.

We record the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period.

Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in

accumulated other comprehensive loss. There were no significant credit losses recognized in the first 39 weeks of fiscal 2026.

The following table presents our available-for-sale marketable securities as of March 28, 2026 and June 28, 2025:

As of March 28, 2026, the balance of available-for-sale securities by contractual maturity is shown in the following

table. Within the table, maturities of fixed income securities have been allocated based upon timing of estimated cash flows.

Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay

obligations without prepayment penalties.

There were no significant realized gains or losses in marketable securities in the first 39 weeks of fiscal 2026.

7. DERIVATIVE FINANCIAL INSTRUMENTS

Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, we do

not use derivative financial instruments for trading or speculative purposes. Hedging strategies are used to manage interest rate

risk, foreign currency risk and fuel price risk.

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Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of

fixed and floating rates. In the third quarter of fiscal 2026, we entered into receive-fixed, pay-floating swap agreements to trade

the fixed interest rate on $600 million of 4.40% senior notes and $650 million of 4.95% senior notes with variable rates,

respectively. The interest rate swaps are designated as fair value hedges and gains or losses on the hedges impact interest

expense within the consolidated statements of income.

Hedging of foreign currency risk

Sysco has cross-currency swaps that hedge the foreign currency exposure of our net investment in certain foreign

operations. These cross-currency swaps are designated as net investment hedges with gains and losses recognized within

accumulated other comprehensive income (loss), including changes in fair value attributed to the spot-forward rate differential

which are excluded from the assessment of hedge effectiveness. The initial value of the excluded component is recognized in

earnings over the life of the hedging instrument. In the third quarter of fiscal 2026, we entered into $814 million Canadian

dollar cross-currency swaps which will mature on June 25, 2031 to hedge the foreign currency exposure of the net investment

in our Canadian operations.

Sysco routinely manages foreign currency risk with spot and forward-rate cross-currency swaps on foreign-

denominated balances. The swaps are designated as fair value hedges and for swaps hedging the change in foreign currency

spot rates, we have elected to exclude the changes in fair value of the forward points from the assessments of hedge

effectiveness. Gains or losses from fair value hedges impact the same category on the consolidated statements of income as the

item being hedged, including the value of the excluded components which is recognized in earnings over the life of the hedging

instrument. Subsequent to March 28, 2026, Sysco entered an intercompany loan with an affiliate that is denominated in euro

that will mature July 10, 2026. To hedge our foreign currency risk, we entered into a cross currency swap for €450 million and

designated it as a fair value hedge.

Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency,

such as the Euro, U.S. dollar, Polish zloty and Danish krone. Accounts payable associated with these inventory purchases give

rise to foreign currency exposure between the functional currency of each entity and these currencies. We periodically enter into

foreign currency forward swap contracts to sell the applicable entity’s functional currency and buy currencies matching the

inventory purchase, which operate as cash flow hedges of the company’s foreign currency-denominated inventory purchases.

Hedging of fuel price risk

Sysco uses fuel commodity swap contracts to hedge against the risk of the change in the price of diesel fuel on

anticipated future purchases. These swaps are designated as cash flow hedges.

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None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging

instruments as of March 28, 2026 are presented below:

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheets as of

March 28, 2026 and June 28, 2025 are as follows:

Gains or losses recognized in the consolidated results of operations for cash flow hedging relationships are not

significant for each of the periods presented. The location and amount of gains or losses recognized in the consolidated results

of operations for fair value hedging relationships for each of the periods, presented on a pretax basis, are as follows:

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The gains and losses on the fair value hedging relationships associated with the hedged items as disclosed in the table

above consist of the following components for each of the periods presented:

The location and effect of cash flow, net investment, and excluded components of fair value hedges on the

consolidated statements of comprehensive income for the 13-week periods ended March 28, 2026 and March 29, 2025,

presented on a pretax basis, are as follows:

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• (In millions)
• (In millions)_

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The location and effect of cash flow, net investment, and excluded components of fair value hedges on the

consolidated statements of comprehensive income for the 39-week periods ended March 28, 2026 and March 29, 2025,

presented on a pretax basis, are as follows:

• (In millions)
• (In millions)_

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of March 28, 2026 are as

follows:

The carrying amount of hedged liabilities in the consolidated balance sheet as of June 28, 2025 is $1.1 billion.

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8. DEBT

On September 5, 2025, Sysco entered into a new long-term revolving credit facility, which replaces the $3.0 billion

senior revolving credit facility that was originally entered into on April 29, 2022. The aggregate commitments of the lenders

under the new long-term credit agreement are $3.0 billion, with an option to increase such commitments to $4.0 billion. The

new facility includes a covenant requiring Sysco to maintain a ratio of consolidated EBITDA to consolidated interest expense

of 3.0 to 1.0 over four consecutive fiscal quarters, which is consistent with our previous revolving credit facility. The new

revolving credit facility expires on September 5, 2030. As of March 28, 2026, there were no borrowings outstanding under this

facility. In April 2026, Sysco replaced the 2025 credit facility described above. See more information in Note 15, Subsequent

Events.

We have a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate

amount not to exceed $3.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported

by the long-term revolving credit facility noted above. As of March 28, 2026, there were no U.S. commercial paper issuances

outstanding under this program. We have commercial paper issuances outstanding under this program in Europe. In December

2025, Sysco entered into an agreement to increase the maximum allowable principal amount of the commercial paper issuances

in Europe, with borrowings not to exceed €750 million. As of March 28, 2026, there were €410 million (the equivalent of

$473 million) in commercial paper issuances outstanding in Europe.

On February 13, 2026, Sysco issued senior notes (the Notes) totaling $1.25 billion. Details of the Notes are as follows:

The Notes initially are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries

that guarantee Sysco’s other senior notes issued under the indenture governing the Notes or any of Sysco’s other indebtedness.

Subsidiaries acquired or created in the future may or may not become guarantors, but any domestic subsidiary that guarantees

our other senior notes or our other indebtedness must also guarantee the Notes. Interest on the 2031 Notes will be paid semi-

annually in arrears on January 25 and July 25, beginning on July 25, 2026. Interest on the 2036 Notes will be paid semi-

annually in arrears on March 25 and September 25, beginning on September 25, 2026. The 2031 Notes will mature on July 25,

2031, and the 2036 Notes will mature on March 25, 2036. At Sysco’s option, any or all of the Notes may be redeemed, in whole

or in part, at any time prior to maturity. If we elect to redeem (i) the 2031 Notes before the date that is one month prior to the

maturity date, or (ii) the 2036 Notes before the date that is three months prior to the maturity date, Sysco will pay a redemption

price equal to the greater of (1) 100% of the principal amount of the Notes of the applicable series to be redeemed plus, in either

case, accrued and unpaid interest thereon to, but excluding, the date of redemption and (2) a “make-whole” amount calculated

by reference to the sum of the present values of the remaining scheduled payments of principal and interest on the Notes of the

applicable series to be redeemed discounted to the date of redemption . If we elect to redeem a series of Notes on or after the

applicable date described in the preceding sentence, Sysco will pay a redemption price equal to 100% of the principal amount of

the Notes being redeemed plus accrued and unpaid interest thereon to the date of redemption.

The total carrying value of our debt was $14.0 billion as of March 28, 2026 and $13.3 billion as of June 28, 2025. The

increase in the carrying value of our debt during the 39-week period ended March 28, 2026 was due to the issuance of the Notes

and borrowings under our European commercial paper program, partially offset by a senior note that matured in October 2025.

Information regarding the guarantors of our registered debt securities is contained in the section captioned Guarantor

Summarized Financial Information in “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” in Item 2 of Part I of this Form 10-Q.

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9. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

The number of securities that were not included in the diluted earnings per share calculation because the effect would

have been anti-dilutive was approximately 1,600,000 and 4,667,000 for the third quarter of fiscal 2026 and 2025, respectively,

and approximately 2,274,000 and 3,722,000 for the first 39 weeks of fiscal 2026 and fiscal 2025, respectively.

10. OTHER COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such

as foreign currency translation adjustment, amounts related to certain hedging arrangements, amounts related to pension and

other postretirement plans and changes in marketable securities. Comprehensive income was $373 million and $542 million for

the third quarter of fiscal 2026 and fiscal 2025, respectively. Comprehensive income was $1.2 billion and $1.4 billion for the

first 39 weeks of fiscal 2026 and 2025, respectively.

A summary of the components of other comprehensive income (loss) and the related tax effects for each of the periods

presented is as follows:

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The following tables provide a summary of the changes in accumulated other comprehensive (loss) income for the

periods presented:

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11. SHARE-BASED COMPENSATION

Sysco provides compensation benefits to employees under several share-based payment arrangements, including

various long-term employee stock incentive plans and the 2015 Employee Stock Purchase Plan (ESPP).

Stock Incentive Plans

In the first 39 weeks of fiscal 2026, options to purchase 726,016 shares were granted to employees. The fair value of

each option award is estimated as of the date of grant using a Black-Scholes option pricing model. The weighted average grant-

date fair value per option granted during the first 39 weeks of fiscal 2026 was $19.52.

In the first 39 weeks of fiscal 2026, employees were granted 460,258 performance share units (PSUs). Based on the

jurisdiction in which the employee resides, some of these PSUs were granted with forfeitable dividend equivalents. The fair

value of each PSU award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For

PSUs granted without dividend equivalents, the fair value is reduced by the present value of expected dividends during the

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vesting period. The weighted average grant-date fair value per PSU granted during the first 39 weeks of fiscal 2026 was $86.22.

The PSUs will convert into shares of Sysco’s common stock at the end of the three-year performance period based on actual

performance targets achieved, as well as the market-based return of Sysco’s common stock relative to that of each company

within the S&P 500 index.

In the first 39 weeks of fiscal 2026, employees were granted 1,353,984 restricted stock units. The weighted average

grant-date fair value per restricted stock unit granted during the first 39 weeks of fiscal 2026 was $77.46.

Employee Stock Purchase Plan

Plan participants purchased 838,005 shares of common stock under the ESPP during the first 39 weeks of fiscal 2026.

The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $11.37 during the first 39

weeks of fiscal 2026. The fair value of each stock purchase right is estimated as the difference between the stock price at the

date of issuance and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost that has been recognized in results of operations was $95 million and $74

million for the first 39 weeks of fiscal 2026 and fiscal 2025, respectively.

As of March 28, 2026, there was a total of $162 million of unrecognized compensation cost related to share-based

compensation arrangements. This cost is expected to be recognized over a weighted-average period of 1.88 years.

12. INCOME TAXES

Effective Tax Rate

The effective tax rates for the third quarter and first 39 weeks of fiscal 2026 were 23.6% and 22.5%, respectively.

These rates were higher than the company’s 21.0% statutory tax rate primarily due to the impact of state income taxes, partially

offset by a foreign income tax benefit and equity-based compensation excess tax benefits.

The effective tax rates for the third quarter and first 39 weeks of fiscal 2025 were 23.3% and 23.6%, respectively.

These rates were higher than the company’s 21.0% statutory tax rate primarily as a result of state income taxes, partially offset

by a foreign income tax benefit and equity-based compensation excess tax benefits.

Uncertain Tax Positions

As of March 28, 2026, the gross amount of unrecognized tax benefit and related accrued interest was $68 million and

$20 million, respectively. It is reasonably possible the amount of the unrecognized tax benefit with respect to certain

unrecognized tax positions of the company will increase or decrease in the next 12 months. At this time, an estimate of the

range of the reasonably possible change cannot be made.

During the third quarter of fiscal 2023, Sysco received a Statutory Notice of Deficiency from the Internal Revenue

Service, mainly related to foreign tax credits generated in fiscal 2018 from repatriated earnings primarily from our Canadian

operations. In the fourth quarter of fiscal 2023, the company filed suit in the U.S. Tax Court challenging the validity of certain

tax regulations related to the one-time transition tax on unrepatriated foreign earnings, which were enacted as part of the Tax

Cuts and Jobs Act of 2017 (TCJA). The lawsuit seeks to have the court invalidate these regulations, which would affirm the

company’s position regarding its foreign tax credits. Sysco has previously recorded a benefit of $131 million attributable to its

interpretation of the TCJA and the Internal Revenue Code. If we are ultimately unsuccessful in defending our position, we may

be required to reverse all, or some portion, of the benefit previously recorded.

Other

The Inflation Reduction Act includes provisions that allow for the transfer of certain federal clean energy tax credits

(Transferable Tax Credits). In September 2025, we entered into a contract to purchase Transferable Tax Credits which will be

applied against our fiscal 2026 federal income tax liability. Through March 28, 2026, we have purchased $241 million of

Transferable Tax Credits.

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The determination of our provision for income taxes requires judgment, the use of estimates and the interpretation and

application of complex tax laws. Our provision for income taxes reflects income earned and taxed in the various U.S. federal

and state, as well as foreign jurisdictions. Tax law changes, increases or decreases in permanent book versus tax basis

differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and our change in the

mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

13. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Sysco is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of

loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to

reasonably possible to probable. When probable and reasonably estimable, the losses have been accrued. Although the final

results of legal proceedings cannot be predicted with certainty, based on estimates of the range of potential losses associated

with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the

aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the company.

14. BUSINESS SEGMENT INFORMATION

Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments

and other foodservice customers. Our primary operations are located in North America and Europe. Under the accounting

provisions related to disclosures about segments of an enterprise, we have aggregated certain operating segments into three

reportable segments. “Other” financial information is attributable to our other operating segments that do not meet the

quantitative disclosure thresholds.

• U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line

of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide

variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce

distribution business, our Buckhead | Newport Meat & Seafood specialty protein operations, our growing Italian

Specialty platform anchored by Greco & Sons, Inc., our Edward Don restaurant equipment and supplies

distribution business, our Asian specialty distribution company and a number of other small specialty businesses

that are not material to the operations of Sysco;

• International Foodservice Operations – includes operations outside of the United States (U.S.), which distribute

a full line of food products and a wide variety of non-food products. The Americas primarily consists of

operations in Canada, Bahamas, Costa Rica and Panama, as well as our export operations that distribute to

international customers. Our European operations primarily consist of operations in the United Kingdom (U.K.),

France, Ireland and Sweden;

• SYGMA – our U.S. customized distribution operations serving quick-service chain restaurant customer locations;

and

• Other – primarily our hotel supply operations, Guest Worldwide.

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The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial

statements. Our Global Support Center expenses generally include all expenses of the corporate office and Sysco’s shared

service operations. Collectively, our Global Support Center provides numerous centralized services to our operating sites and

performs support activities for employees, suppliers and customers. These services include customer and vendor contract

administration, finance, legal, information technology, risk management and insurance, sales and marketing, merchandising,

inbound logistics, human resources, and strategy. Expenses for the Global Support Center primarily consist of payroll costs for

employees assigned to these operations, including severance, if any, all U.S. share-based compensation costs, and certain

information technology, self-insurance, and depreciation expenses.

Our chief operating decision maker (CODM) is our chief executive officer, who is responsible for setting the

company's strategic direction, managing overall operations, and is the main point of communication between the board of

directors and key operational personnel within the organization. The CODM regularly reviews financial results, operating

performance, and capital expenditures of our reportable segments. Our CODM uses operating income as a primary measure of

segment performance and as a comparison between each of our segments. Operating income is defined as income before

interest expense, other expense (income), net, and income taxes. The significant expense categories and amounts presented

below align with the segment-level information that is regularly provided to the CODM. The following tables set forth certain

financial information for Sysco’s business segments.

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15. SUBSEQUENT EVENTS

On March 30, 2026, Sysco Corporation entered into an agreement (the Merger Agreement) to acquire Jetro Restaurant

Depot (JRD), a leading U.S. wholesale cash-and-carry foodservice provider serving smaller, independent restaurants and

businesses. JRD operates 167 large-format warehouse stores across 35 states that serve more than 725,000 independent

restaurants and foodservice operators with a broad assortment of fresh and low-priced products.

Sysco has agreed to pay approximately $29.1 billion to JRD shareholders, comprising of approximately $21.6 billion

in cash, subject to customary adjustments, and 91.5 million shares of Sysco common stock. Following the transaction, JRD’s

equity holders are expected to hold approximately 16% of the outstanding common stock of Sysco in the aggregate.

The cash portion of the purchase price is expected to be financed with a combination of new senior unsecured notes,

hybrid debt, cash on hand and equity or equity-linked securities. Sysco has executed a commitment letter for a $22 billion

senior unsecured 364-day bridge loan facility that could be used to fund the cash portion of the purchase price and pay related

fees and expenses. Subsequent to the execution of the commitment letter for the bridge loan facility, Sysco entered into a

$3 billion senior unsecured delayed draw term loan facility, comprising a $1.25 billion 364-day tranche and a $1.75 billion 2-

year tranche, reducing the bridge loan facility commitments from $22 billion to $19 billion. Fees paid upfront for this facility as

of April 10, 2026 total $88 million and will be amortized to interest expense within our statement of consolidated results of

operations over the expected life of the bridge facility unless it is terminated at an earlier date. Additional fees will apply at later

stages.

We have executed cash-settled deal contingent rate lock transactions to mitigate interest rate risk on $6.3 billion of

future permanent debt that could potentially be issued to finance the purchase of JRD. As these interest rate lock transactions

are contingent upon whether the transaction is successfully consummated, we have not elected to apply hedge accounting at this

time and any unrealized gains or losses will be recognized in Other income and expense within our statement of consolidated

results of operations.

On April 16, 2026, Sysco entered into a new long-term revolving credit facility, which replaces Sysco’s existing

$3.0 billion senior revolving credit facility that was originally entered into on September 5, 2025. The aggregate commitments

of the lenders under the new revolving credit agreement are $3.0 billion, and such commitments will increase to $4.0 billion

after the acquisition of JRD is complete. The new revolving credit agreement has an option to increase such commitments to

$5.0 billion. The new facility includes a covenant requiring Sysco to maintain a ratio of consolidated EBITDA to consolidated

interest expense of 3.0 to 1.0 over four consecutive fiscal quarters, which is consistent with our previous revolving credit

facility. The new revolving credit facility expires on April 16, 2031.

This transaction is expected to close by the third quarter of Sysco’s fiscal 2027, subject to the satisfaction of customary

closing conditions, including regulatory clearance under the Hart-Scott-Rodino Act. If the Merger Agreement is terminated due

to a failure to obtain required regulatory clearances, Sysco has agreed to pay JRD a termination fee of $1.164 billion.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with our consolidated financial statements as of June 28, 2025, and for

the fiscal year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both

contained in our fiscal 2025 Form 10-K, as well as the consolidated financial statements (unaudited) and notes to the

consolidated financial statements (unaudited) contained in this report.

Highlights

Our third quarter of fiscal 2026 results included sales growth of 4.7% as compared to the third quarter of fiscal 2025,

primarily driven by volume improvements across our business. Sales increased in our U.S. Foodservice Operations,

International Foodservice Operations, and SYGMA segments. Our gross profit increased 6.5% compared to the third quarter of

fiscal 2025, due to our strategic sourcing efforts, favorable changes in customer mix, and the effective management of product

cost inflation. Operating income decreased 9.1% compared to the third quarter of fiscal 2025, due to higher incentive

compensation, increased restructuring and transformational project costs, and higher acquisition and due diligence costs. We

consider restructuring and transformational project costs and acquisition and due diligence costs to be “Certain Item” expenses

(as defined below). Excluding Certain Item expenses, adjusted operating income decreased 0.6% as compared to the third

quarter of fiscal 2025, primarily due to higher incentive compensation. Our net earnings for the third quarter of fiscal 2026

decreased 15.2% as compared to the third quarter of fiscal 2025. Excluding Certain Item expenses, adjusted net earnings

decreased by 3.6% as compared to the third quarter of fiscal 2025. See below for a comparison of our fiscal 2026 results to our

fiscal 2025 results, both including and excluding Certain Items.

Comparisons of results from the third quarter of fiscal 2026 to the third quarter of fiscal 2025 are presented below:

• Sales:
  • increased 4.7%, or $921 million, to $20.5 billion;
• Operating income:
  • decreased 9.1%, or $62 million, to $619 million;
  • adjusted operating income decreased 0.6%, or $5 million, to $768 million;
• Net earnings:
  • decreased 15.2%, or $61 million, to $340 million;
  • adjusted net earnings decreased 3.6%, or $17 million, to $452 million;
• Basic earnings per share:
  • decreased 13.4%, or $0.11, to $0.71 per share;
• Diluted earnings per share:
  • decreased 13.4% or $0.11, to $0.71 per share;
  • adjusted diluted earnings per share decreased 2.1%, or $0.02, to $0.94 per share;
• EBITDA:
  • decreased 5.1%, or $46 million, to $864 million; and
  • adjusted EBITDA increased 0.1%, or $1 million, to $970 million.

Comparisons of results from the first 39 weeks of fiscal 2026 to the first 39 weeks of fiscal 2025 are presented below:

• Sales:
  • increased 3.6%, or $2.2 billion, to $62.4 billion;
• Operating income:
  • decreased 4.0%, or $88 million, to $2.1 billion;
  • adjusted operating income increased 1.9%, or $46 million, to $2.5 billion;
• Net earnings:
  • decreased 7.0%, or $91 million, to $1.2 billion;
  • adjusted net earnings increased 1.0%, or $14 million, to $1.5 billion;
• Basic earnings per share:
  • decreased 4.9%, or $0.13, to $2.52 per share;
• Diluted earnings per share:
  • decreased 4.9% , or $0.13 to $2.51 per share;
  • adjusted diluted earnings per share increased 3.4%, or $0.10, to $3.08 per share;
• EBITDA:
  • decreased 3.0%, or $85 million, to $2.8 billion; and
  • adjusted EBITDA increased 1.2%, or $36 million, to $3.0 billion.

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The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted

EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and

free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove: (1) restructuring charges;

(2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs

consisting of (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions.

Adjustments provided herein for fiscal 2026 results of operations also remove the impact of a charge associated with a legal

matter. No similar charge was applicable in fiscal 2025.

The fiscal 2026 and fiscal 2025 items discussed above are collectively referred to as “Certain Items.” The results of

our operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We

measure our results on a constant currency basis.

Trends

Economic and Industry Trends

Foot traffic to restaurants experienced a decrease of 1.9% in the third quarter of fiscal 2026. Our U.S. Foodservice

Operations local case growth trends experienced a sequential improvement of 210 basis points compared to the second quarter

of fiscal 2026, despite the industry’s foot traffic performance. The macroeconomic environment was similar in the third quarter

of fiscal 2026 as compared to the previous quarter, which has continued to adversely impact consumer sentiment. Despite the

current macroeconomic landscape, we expect to grow our sales in fiscal 2026. We believe the food-away-from-home sector is a

healthy, long-term growth market, and Sysco is diversified and well positioned as a market leader in food service.

Sales and Gross Profit Trends

Sales increased 4.7% and 3.6% in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the

third quarter and first 39 weeks of fiscal 2025. Our sales and gross profit performance are influenced by multiple factors,

including price, volume, inflation, customer mix and product mix. We experienced a 2.3% and 1.0% increase in U.S.

Foodservice Operations case volume in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third

quarter and first 39 weeks of fiscal 2025. Our volume growth trends were attributable to local case volume increasing 3.3% and

1.4% in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of

fiscal 2025. Our local case volumes have improved due to improved sales colleague retention and incremental sales colleague

productivity improvements. National case volume increased 1.4% and 0.9% in the third quarter and first 39 weeks of fiscal

2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025. Our volume reflects our broadline and

specialty businesses. Beginning in fiscal 2026, we are now including volumes from our specialty meat business for all periods

presented. We expect continued local volume growth in the fourth quarter of fiscal 2026 of at least 2.5% due to continued sales

consultant productivity improvements. In addition, we expect national case volume growth in the fourth quarter due to the

strength of our non-restaurant business and the onboarding of new national restaurant customers.

We experienced inflation at a rate of 2.8% in the third quarter of fiscal 2026, at the total enterprise level, primarily

driven by inflation in the dairy, meat, and seafood categories. We continue to address inflation by successfully managing

through cost increases in a timely manner. Gross margin increased 31 and 20 basis points in the third quarter and first 39 weeks

of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025, primarily due to benefits from

our strategic sourcing initiatives, stronger volume performance from local customers and improving mix from Sysco Brand

penetration rates, and the effective management of product cost inflation.

Operating Expense Trends

Total operating expenses were $3.2 billion and $9.4 billion in the third quarter and first 39 weeks of fiscal 2026, a

10.1% and 6.9% increase compared to the third quarter and first 39 weeks of fiscal 2025, respectively. Total adjusted operating

expenses were $3.0 billion and $9.0 billion in the third quarter and first 39 weeks of fiscal 2026, an 8.4% and 5.6% increase

compared to the third quarter and first 39 weeks of fiscal 2025, respectively. Operating expenses increased primarily due to

higher incentive compensation, sales headcount investments, increased acquisition and due diligence costs, and increased costs

associated with expanded building capacity, partially offset by decreases in insurance costs. Adjusted operating expenses were

14.8% and 14.5% of sales during the third quarter and first 39 weeks of fiscal 2026, which represents a 51 and 27 basis point

increase as compared to the third quarter and first 39 weeks of fiscal 2025, respectively, as a result of higher incentive

compensation, sales headcount investments, and increased costs associated with expanded building capacity, partially offset by

decreases in insurance costs.

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Amortization Expense Trends

Sysco’s operations within the United Kingdom, located within the International Foodservice Operations segment,

initiated a rebranding effort in the second quarter of fiscal 2026 to transition the Brakes® brand and other smaller brands to

“Sysco GB.” This rebranding initiative will take approximately two years to complete and will result in Sysco amortizing

previously indefinite-lived intangible assets on a straight-line basis over this two-year period. The rebranding is expected to

result in approximately $100 million of additional amortization expense over two years, including approximately $29 million in

fiscal 2026. This amortization expense will be treated as a Certain Item, which is consistent with our treatment of amortization

expense of other previously acquired intangible assets.

Mergers and Acquisitions

In October 2025, we acquired Fairfax Meadow, a leading specialty meat supplier based in the United Kingdom. This

acquisition follows our acquisition of Campbells Prime Meat last fiscal year and positions our team in the United Kingdom to

achieve additional growth by leveraging additional specialty meat capabilities geographically. This company’s results are

included within International Foodservice Operations and were not material to our results for the third quarter and first 39

weeks of fiscal 2026.

In December 2025, we acquired Ginsberg’s Foods, a broadline distributor servicing restaurants, schools, and

healthcare facilities across eastern New York and neighboring states. This acquisition opens opportunities to new customers

while creating procurement efficiencies through Sysco buying programs and expanded access to Sysco brand products. This

company’s results are included within U.S. Foodservice Operations and were not material to our results for the third quarter and

first 39 weeks of fiscal 2026.

In March 2026, we announced an agreement to acquire Jetro Restaurant Depot (JRD), a leading U.S. wholesale cash-

and-carry foodservice provider serving smaller, independent restaurants and businesses (the Proposed Transaction). JRD

operates 167 large-format warehouse stores across 35 states that serve more than 725,000 independent restaurants and

foodservice operators with a broad assortment of fresh and low-priced products. This transaction is expected to close by the

third quarter of Sysco’s fiscal 2027, subject to the satisfaction of customary closing conditions, including regulatory clearance

under the Hart-Scott-Rodino Act. See Note 15 "Subsequent Events" for more information on the terms of the Proposed

Transaction.

Interest Expense and Other Income and Expense Trends

The cash portion of the purchase price in the Proposed Transaction is expected to be financed with a combination of

new senior unsecured notes, hybrid debt, cash on hand and equity or equity-linked securities. Sysco has executed a commitment

letter for a $22 billion senior unsecured 364-day bridge loan facility that could be used to fund the cash portion of the purchase

price and pay related fees and expenses. Subsequent to the execution of the bridge loan facility, Sysco entered into a $3 billion

senior unsecured delayed draw term loan facility, comprising a $1.25 billion 364-day tranche and a $1.75 billion 2-year tranche,

reducing the bridge loan facility commitments from $22 billion to $19 billion. Fees paid upfront for this facility as of April 10,

2026 total $88 million and will be amortized to interest expense within our statement of consolidated results of operations over

the expected life of the bridge facility unless it is terminated at an earlier date. Additional fees will apply at later stages. This

bridge facility is expected to add approximately $30 million of interest expense in fiscal 2026. Additionally, Sysco has executed

cash-settled deal contingent rate lock transactions to mitigate interest rate risk on $6.3 billion of future permanent debt that

could potentially be issued to finance the Proposed Transaction. As these interest rate lock transactions are contingent upon

whether the Proposed Transaction is successfully consummated, we have not elected to apply hedge accounting at this time, and

any unrealized gains or losses will be recognized in Other income and expense within our statement of consolidated results of

operations. Our incremental interest expense from the bridge loan facility and any fair value gains or losses on these interest

rate locks will be treated as a Certain Item. See Note 15 "Subsequent Events" for more information on the terms of the Proposed

Transaction.

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Strategy

Our purpose is “Connecting the World to Share Food and Care for One Another.” Purpose-driven companies are

believed to perform better. We believe our purpose will assist us to grow substantially faster than the foodservice distribution

industry and deliver profitable growth through our Recipe for Growth transformation. This growth transformation is supported

by strategic pillars that we believe will allow us to better serve our customers, including our digital, products and solutions,

supply chain, customer teams, and future horizons strategies.

Our business transformation initiatives are progressing, which include promoting our specialty programs for produce,

protein and Italian products, and our customer growth initiatives. From these actions, as a part of our Recipe for Growth, the

benefits of our developing capabilities are apparent in the new customers we are winning and in the progress we are making

toward increasing market share. We expect that, as our Recipe for Growth matures, the impact on our top-line growth will

deliver profitable and consistent growth. Our proposed acquisition of JRD is a part of our future horizons strategy enabling us

to enter the wholesale cash and carry foodservice segment, which is a resilient and growing channel.

Results of Operations

The following table sets forth the components of our consolidated results of operations expressed as a percentage of

sales for the periods indicated:

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The following table sets forth the change in the components of our consolidated results of operations expressed as a

percentage increase or decrease over the comparable period in the prior year:

(1) Other expense (income), net was expense of $6 million and $9 million in the third quarter of fiscal 2026 and fiscal 2025, respectively.

(2) Other expense (income), net was expense of $44 million and $32 million in the first 39 weeks of fiscal 2026 and fiscal 2025, respectively.

The following tables represent our results by reportable segments:

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Based on information in Note 14, “Business Segment Information,” in the Notes to Consolidated Financial Statements

in Item 1 of Part I of this Form 10-Q, U.S. Foodservice Operations and International Foodservice Operations, collectively,

represented approximately 88.3% and 88.5% of Sysco’s overall sales in the third quarter and first 39 weeks of fiscal 2026,

respectively. U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately

97.2% of total segment operating income in both the third quarter and first 39 weeks of fiscal 2026, respectively. This illustrates

that these segments represent a substantial majority of our total segment results when compared to other reportable segments.

Results of U.S. Foodservice Operations

The following table sets forth a summary of the components of operating income expressed as a percentage increase or

decrease over the comparable period in the prior year:

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Sales

The following table sets forth the percentage and dollar value increase or decrease in the major factors impacting sales

as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change:

(1) Case volumes increased 2.3% and 1.0% compared to the third quarter and first 39 weeks of fiscal 2025, respectively. This volume increase resulted in a 2.3% and 1.0% increase in the dollar value of sales compared to the third quarter and first 39 weeks of fiscal 2025, respectively.

The sales growth in our U.S. Foodservice Operations was primarily driven by case volume growth. Case volumes from

our U.S. Foodservice Operations increased 2.3% and 1.0% in the third quarter and first 39 weeks of fiscal 2026, respectively, as

compared to the third quarter and first 39 weeks of fiscal 2025. The growth in case volumes was attributable to local case

volumes increasing 3.3% and 1.4% in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third

quarter and first 39 weeks of fiscal 2025. National case volumes increased 1.4% and 0.9% in the third quarter and first 39

weeks of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025.

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Operating Income

The increase in operating income for the third quarter of fiscal 2026, as compared to the third quarter fiscal 2025, was

driven by case volume growth and gross profit dollar growth, partially offset by an increase in operating expenses. The decrease

in operating income for the first 39 weeks of fiscal 2026, as compared to the first 39 weeks of fiscal 2025, was driven by an

increase in operating expenses, partially offset by case volume growth and gross profit dollar growth.

Gross profit dollars increased in the third quarter and first 39 weeks of fiscal 2026 as compared to the third quarter and

first 39 weeks of fiscal 2025, primarily as a result of improvements in our strategic sourcing initiatives, stronger volume

performance from local customers and improving mix from Sysco Brand penetration rates, and the effective management of

product cost fluctuations. Our local case volumes have improved due to improved sales colleague retention and incremental

sales colleague productivity improvements. The estimated change in product costs, an internal measure of inflation or deflation,

increased in the third quarter and first 39 weeks of fiscal 2026. Gross margin, which is gross profit as a percentage of sales, was

19.24% and 19.08% in the third quarter and first 39 weeks of fiscal 2026, respectively, for our U.S. Foodservice Operations,

which was an increase of 38 basis points compared to gross margin of 18.86% in the third quarter of fiscal 2025, and an

increase of 12 basis points compared to a gross margin of 18.96% in the first 39 weeks of fiscal 2025. The improvement in the

third quarter and first 39 weeks of fiscal 2026 is attributable to improvements in our strategic sourcing initiatives, favorable

changes in customer mix, and the effective management of product cost fluctuations.

The increase in operating expenses for the third quarter and first 39 weeks of fiscal 2026, as compared to the third

quarter and first 39 weeks of fiscal 2025, was primarily driven by increases in colleague-related costs, which is inclusive of

incentive compensation, and costs associated with investments in sales headcount and building expansions.

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Results of International Foodservice Operations

The following table sets forth a summary of the components of operating income and adjusted operating income

expressed as a percentage increase or decrease over the comparable period in the prior year:

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Sales

The following table sets forth the percentage and dollar value increase or decrease in the major components impacting

sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.

Sales for the third quarter of fiscal 2026 increased 12.4% as compared to the third quarter of fiscal 2025. Sales for the

first 39 weeks of fiscal 2026 increased 8.0% as compared to the first 39 weeks of fiscal 2025. The sales increase in both periods

is primarily due to the impact of foreign currency translation, higher inflation, and local case growth. Excluding the impact of

the Mexico joint venture, which was divested in the second quarter of fiscal 2025, sales increased 10.0% in the first 39 weeks of

fiscal 2026 as compared to the first 39 weeks of fiscal 2025.

Operating Income

The decrease in operating income for the third quarter of fiscal 2026, as compared to the third quarter of fiscal 2025,

was primarily due to increases in operating expenses, partially offset by local case volume growth driven by expanded supply

chain capacity, increased availability of Sysco branded merchandise, and increased sales colleague headcount. The increase in

operating income for the first 39 weeks of fiscal 2026, as compared to the first 39 weeks of fiscal 2025, is primarily due to local

case volume growth driven by expanded supply chain capacity, increased availability of Sysco branded merchandise, and

increased sales colleague headcount, partially offset by increases in operating expenses.

The increase in gross profit dollars in the third quarter and first 39 weeks of fiscal 2026, as compared to the third

quarter and first 39 weeks of fiscal 2025, was primarily attributable to increases in local case volumes. Local case volumes

increased approximately 3.8% in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025.

The increase in operating expenses in the third quarter and first 39 weeks of fiscal 2026 as compared to the third

quarter and first 39 weeks of fiscal 2025 was primarily due to increases in colleague-related costs and supply chain

transformation costs, as well as the impact of foreign currency translation.

Results of SYGMA and Other Segment

SYGMA segment sales were 2.5% and 2.3% higher in the third quarter and first 39 weeks of fiscal 2026, respectively,

as compared to the third quarter and first 39 weeks of fiscal 2025. Operating income increased $1 million and $10 million in the

third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025.

These results are reflective of recent increased strength in our supply chain operations.

For the operations that are grouped within Other, operating income increased $10 million and $8 million in the third

quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025. The

operations of this group primarily consist of our hospitality business, Guest Worldwide.

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Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service

operations. These expenses in the third quarter of fiscal 2026 increased $63 million, or 30.4%, as compared to the third quarter

of fiscal 2025, primarily due to increases in colleague-related costs, which is inclusive of incentive compensation, and

acquisition and due diligence costs, partially offset by decreases in insurance costs. These expenses in the first 39 weeks of

fiscal 2026 increased $110 million, or 16.2%, as compared to the first 39 weeks of fiscal 2025, primarily due to increases in

colleague-related costs, which is inclusive of incentive compensation, and acquisition and due diligence costs, partially offset

by decreases in insurance costs.

Included in Global Support Center expenses are Certain Items that totaled $30 million and $98 million in the third

quarter and first 39 weeks of fiscal 2026, as compared to $24 million and $54 million in the third quarter and first 39 weeks of

fiscal 2025, respectively. Certain Items impacting the third quarter and first 39 weeks of fiscal 2026 were primarily expenses

associated with our business technology transformation initiatives and acquisition and due diligence costs. Certain Items

impacting the third quarter and first 39 weeks of fiscal 2025 were primarily expenses associated with severances, our business

technology transformation initiatives and expenses associated with acquisitions.

Interest Expense

Interest expense increased $19 million and $43 million for the third quarter and first 39 weeks of fiscal 2026,

respectively, as compared to the third quarter and first 39 weeks of fiscal 2025. The increase was primarily due to interest

expense on recently issued senior notes.

Other Income and Expense

Other expense decreased $3 million and increased $12 million for the third quarter and first 39 weeks of fiscal 2026,

respectively, as compared to the third quarter and first 39 weeks of fiscal 2025. The changes are primarily due to foreign

exchange gains and losses incurred in those periods.

Net Earnings

Net earnings decreased 15.2% and 7.0% in the third quarter and first 39 weeks of fiscal 2026, respectively, as

compared to the third quarter and first 39 weeks of fiscal 2025, primarily due to the items noted above for operating income,

and interest expense, as well as items impacting our income taxes that are discussed in Note 12, “Income Taxes,” in the Notes

to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Adjusted net earnings, excluding Certain Items,

decreased 3.6% and increased 1.0% in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third

quarter and first 39 weeks of fiscal 2025. Adjusted net earnings were favorably impacted in the third quarter and first 39 weeks

of fiscal 2026 by increases in sales volumes, benefits from our strategic sourcing initiatives, and the effective management of

our product cost inflation. Adjusted net earnings were negatively impacted in the third quarter and first 39 weeks of fiscal 2026

by higher incentive compensation.

Earnings Per Share

Basic earnings per share in the third quarter of fiscal 2026 were $0.71, a 13.4% decrease from the comparable prior

year period amount of $0.82 per share. Diluted earnings per share in the third quarter of fiscal 2026 were $0.71, a 13.4%

decrease from the comparable prior year period amount of $0.82 per share. Adjusted diluted earnings per share, excluding

Certain Items, in the third quarter of fiscal 2026 were $0.94, a 2.1% decrease from the comparable prior year amount of $0.96

per share.

Basic earnings per share in the first 39 weeks of fiscal 2026 were $2.52, a 4.9% decrease from the comparable prior

year amount of $2.65 per share. Diluted earnings per share in the first 39 weeks of fiscal 2026 were $2.51, a 4.9% decrease

from the comparable prior year period amount of $2.64 per share. Adjusted diluted earnings per share, excluding Certain Items,

in the first 39 weeks of fiscal 2026 were $3.08, a 3.4% increase from the comparable prior year amount of $2.98 per share.

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Non-GAAP Reconciliations

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove: (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Adjustments provided herein for fiscal 2026 results of operations also remove the impact of a charge associated with a legal matter. No similar charge was applicable in fiscal 2025.

The results of our operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. We also measure our sales growth excluding the impact of our joint venture in Mexico which was divested in the second quarter of fiscal year 2025.

Management believes that adjusting its operating expenses, operating income, operating margin, net earnings and diluted earnings per share to remove these Certain Items, presenting its results on a constant currency basis, and adjusting its sales results to exclude the impact of its joint venture in Mexico provides an important perspective with respect to our underlying business trends and results. It provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations and (2) facilitates comparisons on a year- over-year basis.

Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due diligence costs for those acquisitions. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal year 2026 and fiscal year 2025.

Set forth on the following page is a reconciliation of sales, operating expenses, operating income, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not be equal to the total presented when added due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

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EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA should not be used as a substitute for the most comparable GAAP measure in

assessing Sysco’s overall financial performance for the periods presented. An analysis of any non-GAAP financial measure

should be used in conjunction with results presented in accordance with GAAP. See Item 7, “Management’s Discussion and

Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal 2025 Form

10-K for discussions regarding this non-GAAP performance metric. Set forth below is a reconciliation of actual net earnings to

EBITDA and to adjusted EBITDA results for the periods presented (dollars in millions):

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Liquidity and Capital Resources

Highlights

We produced free cash flow of $1.1 billion in the first 39 weeks of fiscal 2026, as compared to $954 million in the first

39 weeks of fiscal 2025. The increase in free cash flow is attributable to an increase in cash provided by operating activities and

a decrease in capital expenditures, partially offset by a decrease in proceeds from sales of plant and equipment. In the table that

follows, free cash flow for each period presented is reconciled to net cash provided by operating activities and comparisons of

the significant cash flows from the first 39 weeks of fiscal 2026 to the first 39 weeks of fiscal 2025 are provided.

(1) Free cash flow should not be used as a substitute for the most comparable GAAP measure in assessing the company’s liquidity for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal 2025 Form 10-K for discussions regarding this non-GAAP performance metric.

Sources and Uses of Cash

Sysco generates cash in the U.S. and internationally. As of March 28, 2026, we had $1.9 billion in cash and cash

equivalents, approximately 30% of which was held by our international subsidiaries. Sysco’s strategic objectives are funded

primarily by cash from operations and external borrowings. Traditionally, our operations have produced significant cash flow.

Due to our strong financial position, we believe we will continue to be able to effectively access capital markets, as needed.

Cash is generally allocated to working capital requirements, investments compatible with our overall growth strategy (organic

and inorganic), debt management, and shareholder return. The remaining cash balances are invested in high-quality, short-term

instruments.

We believe our cash flow from operations, the availability of liquidity under our commercial paper programs and our

revolving credit facility, and our ability to access capital from financial markets will be sufficient to meet our anticipated cash

requirements for more than the next 12 months, while maintaining sufficient liquidity for normal operating purposes. See Note

15 "Subsequent Events" for more information about our financing plans to our Proposed Transaction.

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Cash Flows

Operating Activities

We generated $1.5 billion in cash flows from operations in the first 39 weeks of fiscal 2026, compared to cash flows

from operations of $1.3 billion in the first 39 weeks of fiscal 2025. In the first 39 weeks of fiscal 2026, these amounts included

year-over-year favorable comparisons on working capital of $45 million due to a favorable comparison in accounts payable,

partially offset by unfavorable comparisons in accounts receivable and inventory. Accrued expenses also had a favorable

comparison, primarily related to lower payments of accrued incentive compensation in the first 39 weeks of fiscal 2026 in

comparison to the first 39 weeks of fiscal 2025. Income taxes positively impacted cash flows from operations, as estimated

payments made in the first 39 weeks of fiscal 2026 were lower compared to the first 39 weeks of fiscal 2025.

Investing Activities

Our capital expenditures in the first 39 weeks of fiscal 2026 consisted primarily of investments in buildings and

building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 39 weeks

of fiscal 2026 were $71 million lower than in the first 39 weeks of fiscal 2025, primarily due to timing of capital spending.

During the first 39 weeks of fiscal 2026, we paid $189 million, net of cash acquired, primarily for the acquisitions of

Fairfax Meadow and Ginsberg’s Foods. During the first 39 weeks of fiscal 2025, we paid $40 million, net of cash acquired, for

the acquisition of Campbells Prime Meat.

During the first 39 weeks of fiscal 2026, we received $131 million in proceeds from sales of plant and equipment,

which was primarily attributable to proceeds received from sale leaseback transactions. During the first 39 weeks of fiscal 2025,

we received $169 million in proceeds from sales of plant and equipment, which was primarily attributable to proceeds received

from sale leaseback transactions.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $124 million in the first 39 weeks of fiscal 2026, as

compared to $96 million in the first 39 weeks of fiscal 2025. The level of option exercises, and thus proceeds, will vary from

period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to

$5.0 billion of the company’s common stock, which will remain available until fully utilized. We repurchased 2,230,415 shares

for $200 million during the first 39 weeks of fiscal 2026. As of March 28, 2026, we had a remaining authorization of

approximately $1.3 billion. We repurchased no additional shares under our authorization from the end of our fiscal third quarter

through April 10, 2026. In connection with the Proposed Transaction, we have suspended the repurchase of additional shares

for the remainder of fiscal 2026.

Dividends paid in the first 39 weeks of fiscal 2026 were $778 million, or $1.62 per share, as compared to $752 million,

or $1.53 per share, in the first 39 weeks of fiscal 2025. In February 2026, we declared our regular quarterly dividend for the

third quarter of fiscal 2026 of $0.54 per share, which was paid in April 2026. In April 2026, we declared our regular quarterly

dividend for the fourth quarter of fiscal 2026 of $0.55 per share, representing an increase of $0.01 per share. This dividend will

be payable in July 2026.

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Debt Activity and Borrowing Availability

Our debt activity, including issuances and repayments, if any, and our borrowing availability are described in Note 8,

“Debt,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Our outstanding borrowings as

of March 28, 2026 are also disclosed within that note.

On March 30, 2026, we executed a commitment letter for a $22 billion senior unsecured 364-day bridge loan facility in

connection with the Proposed Transaction. Subsequent to the execution of the bridge loan facility, Sysco entered into a

$3 billion senior unsecured delayed draw term loan facility, comprising a $1.25 billion 364-day tranche and a $1.75 billion 2-

year tranche, reducing the bridge loan facility commitments from $22 billion to $19 billion.

On April 16, 2026, Sysco entered into a new long-term revolving credit facility, which replaces Sysco’s existing

$3.0 billion senior revolving credit facility that was originally entered into on September 5, 2025. The aggregate commitments

of the lenders under the new revolving credit agreement are $3.0 billion, and such commitments will increase to $4.0 billion

after the completion of the Proposed Transaction. The new revolving credit agreement has an option to increase such

commitments to $5.0 billion. See Note 15 "Subsequent Events" for more information on the terms of the Proposed Transaction.

Guarantor Summarized Financial Information

On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation, which distribute a full line

of food products and a wide variety of non-food products, entered into full and unconditional guarantees of all outstanding

senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. and

borrowings under the company’s $3.0 billion long-term revolving credit facility have also been guaranteed by these

subsidiaries. As of March 28, 2026, Sysco had a total of $12.2 billion in senior notes, debentures and borrowings under the

long-term revolving credit facility that were guaranteed by these subsidiary guarantors. Our remaining consolidated subsidiaries

(non-guarantor subsidiaries) are not obligated under the senior notes indenture, debentures indenture or our long-term revolving

credit facility. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations –

Liquidity and Capital Resources” contained in our fiscal 2025 Form 10-K for additional information regarding the terms of the

guarantees.

Basis of Preparation of the Summarized Financial Information

The summarized financial information of Sysco Corporation (issuer), and certain wholly owned U.S. Broadline

subsidiaries (guarantors) (together, the obligor group) is presented on a combined basis with intercompany balances and

transactions between entities in the obligor group eliminated. Investments in and equity in the earnings of our non-guarantor

subsidiaries, which are not members of the obligor group, have been excluded from the summarized financial information. The

obligor group’s amounts due to, amounts due from and transactions with non-guarantor subsidiaries have been presented in

separate line items, if they are material to the obligor financials. The following tables include summarized financial information

of the obligor group for the periods presented.

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Critical Accounting Estimates

Critical accounting estimates are those that are most important to the portrayal of our financial position and results of

operations. These require our most subjective or complex judgments, often employing the use of estimates about the effect of

matters that are inherently uncertain. We have reviewed with the Audit Committee of the Board of Directors the development

and selection of the critical accounting estimates and this related disclosure. Our most critical accounting estimates pertain to

goodwill and intangible assets, income taxes and company-sponsored pension plans, which are described in Item 7 of our fiscal

2025 Form 10-K.

As part of the rebranding initiative in the United Kingdom discussed above, we performed impairment testing on the

related indefinite-lived intangible assets during fiscal 2026. The assets were determined not to be impaired. The rebranding

initiative will result in Sysco amortizing previously indefinite-lived intangible assets on a straight-line basis over a two-year

period.

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our fiscal 2025 Form 10-K:

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